Policy

Why Some Cable Ops Are Cheering Aereo’s Legal Win

7/16/2012 12:01 AM Eastern

The first-round win Aereo scored against broadcasters
had some cable operators hoping the Internet-TV
startup’s case could kill — or otherwise shake up
— the current retransmission-consent regime.

But other MSOs think Aereo will eventually get its
lights punched out in court on copyright grounds.
On July 11, Aereo was handed an initial legal victory
after Judge Alison Nathan
of the U.S. District
Court for the
Southern District of
New York denied a request
by broadcasters
to shut down its video-streaming
service.

Aereo, whose backers include IAC/InterActiveCorp’s
Barry Diller, this spring launched a live TV and DVR
service in New York that delivers about two dozen
broadcast channels over the Internet to various devices
for $12 per month. The startup was promptly sued by
major broadcasters for copyright infringement.

Aereo’s defense, which Judge Nathan agreed with, relied
on a previous decision that found Cablevision Systems’
Remote Storage-DVR did not violate copyright laws
because it provided dedicated disk storage for each subscriber.
The Aereo service uses a dedicated micro-antenna,
mounted in a rooftop array, for each individual user.

‘NO CABLE REQUIRED’

Even though Aereo markets itself as a service that lets
consumers cut the cord — with the tagline “No cable
required” — operators have been siding with the startup,
at least as its case relates to retransmission consent.

Time Warner Cable CEO Glenn Britt, speaking last
week at the Allen & Co. media conference in Sun Valley,
Idaho, said cable operators have an interest in the
outcome of the Aereo case, given its implications for retrans
payments, Reuters reported.

“If [Aereo is] found to be legal, then the idea of consumers
having to pay for otherwise-free broadcast signals
is called into question,” Britt said.

American Cable Association president and CEO Matt
Polka more explicitly said the trade group — which represents
smaller cable operators — is hoping Aereo’s legal
battle changes the current state of retrans.

“We’re pleased that the court did not prevent the
deployment of this new technology,” Polka said in
a statement. “We hope that technological innovation
both within and without the cable industry provides
answers for consumers and cable operators that
today suffer under the oppressive retransmission-consent
regime forced upon them by the broadcasters
who take advantage of old laws and regulations.”

Comcast executive vice president David Cohen,
speaking at the New England Cable & Telecommunications
Association conference last Thursday in Newport,
R.I., said that in his opinion Aereo’s service ultimately
will likely be found to violate copyright laws. Comcast
holds a majority stake in NBCUniversal.

“Essentially it is a business grabbing a television signal
that is copyrighted and selling it to a consumer,”
Cohen said.

Also at the NECTA convention, Cox Communications
president Patrick Esser said on a panel that Aereo’s
case is quite different from Cablevision’s legal efforts to
validate its network-based DVR service. However, Esser
added, if upheld by the courts, Aereo will prompt other
video distributors to look into the business of distributed
antennas owned by consumers.

Aereo CEO and founder Chet Kanojia called the ruling
a win for consumers. “Today’s decision should serve
as a signal to the public that control and choice are
moving back into the hands of the consumer — that’s
a powerful statement,” he said.

APPEAL DUE

Broadcasters last week appealed the Aereo decision,
even as Diller said he expects Aereo to launch the service
in additional markets nationwide in 2013.

The court ruled “that it is OK to misappropriate
copyrighted material and retransmit it without compensation,”
the plaintiffs in the case — WNET, Fox
Television Stations, 20th Century Fox, WPIX, Univision
and PBS — said in a statement. “While we are
disappointed, we will continue to fight to protect our
copyrights and expect to prevail on appeal.”

TAKEAWAY

Some cable operators are
hoping that an Aereo win in
its lawsuit against broadcasters
could shake up the current
retransmission-consent regime.

TINY ANTENNAS: OK FOR NOW

Excerpts from federal Judge Alison Nathan’s ruling denying broadcasters’ request to shut
down Aereo:

“The overall factual similarity of Aereo’s service to Cablevision [Remote Storage-DVR] … suggests
that Aereo’s service falls within the core of what [the] Cablevision [decision] held lawful.”

“As in Cablevision, the functionality of Aereo’s system from the user’s perspective substantially mirrors
that available using devices such as a DVR or Slingbox, which allow users to access free, over-the-air
broadcast television on mobile internet devices of their choosing.”

“Aereo threatens Plaintiff s with irreparable harm by luring cable subscribers from that distribution
medium into Aereo’s service... [but the broadcasters] have not demonstrated that the balance of hardships
decidedly tips in their favor.”

Source: Multichannel News research

October